SINGAPORE - Singapore's credit profile (triple-A, with stable outlook) reflects its very high per-capita income, a diverse and competitive economy, strong fiscal metrics and robust institutions, Moody's Investors Service said on Thursday (Aug 17).

The credit ratings agency noted that while Singapore currently benefits from the cyclical pickup in external demand, domestic demand remains muted.

It said ongoing economic restructuring intended to shift Singapore away from a historic reliance on the inflow of foreign labour, while concurrently increasing labour productivity is also contributing to lower, albeit less volatile, growth.

Moody's observations came in its just-released annual credit analysis.

It projected that the Singapore economy will grow by 2.5 per cent year on year for the full year, the mid-point of the Government's forecast of 2 to 3 per cent, with external demand continuing to underpin expansion.

The economy grew 2.7 per cent in the first half of this year.

Moody's said that over the longer term, Singapore faces similar structural challenges to other high-income economies, including an ageing population and consequently larger expenditure outlays over the long term.

But a track record of fiscal prudence and large fiscal buffers in Singapore's sovereign wealth funds - namely GIC and Temasek Holdings - provide the country with significant flexibility.

It added that Singapore's susceptibility to event risk is "very low" because of strong external buffers, relatively sound banking system and stable political environment.